The Manager of a Division Is Displeased with the ROI

question 138

Multiple Choice

The manager of a division is displeased with the ROI of the division.Which of the following steps would increase ROI (holding everything else constant) ?

• A)increasing investment
• B)increasing sales
• C)increasing costs
• D)decreasing operating income

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Definitions:

Required Return

The minimum return an investor expects to achieve on an investment, considering its risk level.

Internal Rate of Return

A financial metric used to gauge the profitability of potential investments.

NPV

An evaluation metric used to estimate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Capital Budgeting Analysis

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.